Thursday, February 04, 2016

Low fares, tourism fuel air travel demand in India

Mumbai/New Delhi: India is the fastest growing aviation market in the world, with traffic growing 20.2 per cent year on year.

The scorching pace is driven by low fares, rising demand in smaller cities and steady growth in domestic tourism.

Airlines in India flew 81 million passengers in 2015. And next year, 100 million passengers are expected to travel within the country.

Aided by a 24 per cent reduction in jet fuel prices average air fares on domestic routes have fallen 14 per cent to around Rs 4,500. This has led to a spurt in demand from leisure travellers and small and medium enterprises. The overall sector-wide occupancy rose to 82.5 per cent in 2015 from 76.4 per cent in 2014.

Analysts expect fares to remain range bound in 2016 due to a mix of lower crude oil price and an increase in capacity. They see market leader IndiGo as the biggest beneficiary because of its lower operating costs and fleet expansion plans. Aviation consultancy CAPA’s South Asia Chief Executive Officer Kapil Kaul expects IndiGo to outperform the market again and estimates IndiGo and GoAir will add 30 aircraft between them in 2016-17.
05/02/16 Aneesh Phadnis & Arindam Majumder/Business Standard
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